Transat A.T. Inc. announced that it has reached an agreement with Canada Enterprise Emergency Funding Corporation (“CEEFC”), a federal Crown corporation, to obtain $100 million in additional liquidity.
In connection with the establishment of such additional funding, through the Large Employer Emergency Financing Facility (LEEFF), Transat has reached an agreement with all lenders to defer the April 2023 maturities to April 2024, as well as to defer from October 2022 to October 2023 the date by which the Corporation must meet certain financial covenants.
Such liquidity is in addition to initial financing secured on April 29, 2021, through LEEFF to help the Corporation overcome the effects of the pandemic.
On March 10, 2022, Transat also received an additional $43.3 million for traveller refunds and negotiated favourable 20-month deferrals for certain key terms of the unsecured LEEFF financing agreement.
As stated by Annick Guérard, President and CEO, “This complementary financing and the changes to the existing agreements strengthen our treasury position and reinforce our financial resilience.
“This important financing milestone, combined with sales that have been doing well in recent months, will give us the financial flexibility to deploy our strategic plan with optimism and confidence.”
The additional credit facility made available by the Canada Enterprise Emergency Funding Corporation, which Transat will use as needed over the next few months, is for an amount of $100 million of which 80% is under the terms and conditions of the non-revolving and unsecured credit facility amended this past March, and 20% is under the terms and conditions of the revolving and secured credit facility.
Under the LEEFF financing, Transat issued a total of 4,687,500 warrants for the purchase of an equivalent number of Transat shares at an exercise price of $3.20 per share over a 10-year period1.
The warrants are to vest in proportion to the drawings that will be made, but 50% of vested warrants will be forfeited if the loan were to be repaid in full by December 31, 2023.
The financial arrangement also provides Transat with an additional credit facility for a maximum amount of $50 million, subject to certain conditions that must be met no later than July 29, 2023, including securing additional funding from a third party.
This demonstrates the Crown corporation’s renewed commitment to Transat in the implementation of its recovery plan.